Santa Monica-based Activision Blizzard has agreed to pay $35 million to the Securities and Exchange Commission to settle charges of failing to handle workplace misconduct reports and uphold whistleblower protection rules.
The video game publisher and developer did not admit to or deny the charges in the settlement, which was announced by the SEC on Feb. 3.
The settlement is separate from, but related to, a prior lawsuit filed by the federal Equal Employment Opportunity Commission, which alleged that the company had overlooked rampant sexual harassment of female employees, enforced significant pay disparities between male and female employees and retaliated against those who spoke out.
Activision Blizzard last year agreed to make available an $18 million fund for employees who experienced that sort of harassment and discrimination from 2016 and 2021, as part of a consent decree from that lawsuit. The state Civil Rights Department is also suing Activision Blizzard.
In its announcement, the SEC said Activision Blizzard — whose library includes the StarCraft, Guitar Hero, Crash Bandicoot and Spyro the Dragon franchises — lacked internal mechanisms to collect and analyze employee reports of workplace misconduct between 2018 and 2021. This, the SEC said, resulted in company management not grasping the scale and scope of employee complaints and not being able to assess whether any of the reports required public disclosure.
Additionally, the SEC charges said that Activision Blizzard illegally required former employees, through separation agreements, to disclose that the SEC had reached out to them to make a statement related to the investigation.
“The SEC’s order finds that Activision Blizzard failed to implement necessary controls to collect and review employee complaints about workplace misconduct, which left it without the means to determine whether larger issues existed that needed to be disclosed to investors,” Jason Burt, director of the SEC’s Denver Regional Office, which handled the investigation, said in a statement. “Moreover, taking action to impede former employees from communicating directly with the commission staff about a possible securities law violation is not only bad corporate governance, it is illegal.”
A representative from Activision Blizzard did not return a request for comment.
